"The significant problems we face cannot be solved at the same level of thinking."
> Why USE MODELS?
Mental models help you make better decisions consistently, solve problems and understand life through these frameworks. As Charlie Munger points out, when you make decisions without systems, you can make a good decision out of luck but when you use models, you can find good solutions consistently.
The key to mental models is they generalise life. Using a few of them together will get better results compared to observing each one as an ultimate truth. There are hundreds of models but below I shared 6 of them (and a bonus) I find most practical and useful.
Here are the models.
> Working Backwards.
This one is really big for me.
Solving a problem, creating a product or aiming at anything working backwards (backward reasoning) is perfect for increasing clarity and certainty. Let’s say you have a problem, we all do. Now write the problem down, this is your starting point.
Instead of immediately thinking what to do as a next step, think of your desired outcome when problem is completely solved.
Write your optimum solution, be realistic but detailed. This is your end point. Now work backwards from the end to the start step by step to see how you can connect the two and what are the right potential steps.
We work on products all the time and this model is super helpful. Instead of creating it step by step, I conceptualise what the product should achieve at the end and then work backwards the design required or the content necessary. Development most of the time starts after this scheme is in place.
You can always adjust the steps on the road but a framework provides clarity and speed.
> Anchoring.
Human perception and brain works on comparison. When we are given a set of information, everything after are defined around that information.
When Nike has a premium collaborative shoe with an NBA star and they discount it 100$ to 199$, you are excited to get them. On the other hand there are many shoes in the same store you would think 100$ is a high price. This is a great anchoring example.
Not just pricing though anchoring is huge all over our lives. Think of a deadline you are given, from that point on all your plan evolves around that deadline. You get more intense as the anchor date comes closer. Then the deadline stretches a few days, you suddenly feel relaxed or lucky. All of the actions and emotions are defined by the first date.
While creating products we generally have a goal for content size or preset size, everybody focuses on that throughout the process. When we pass the anchor, everybody celebrates and when we are far from it, there is tension.
You can use anchoring internally to motivate yourself, with your employees or while telling a story, to set the level, to design the final emotion. You can use while negotiating anything, when you set a higher anchor than it becomes easier to make the deal seal.
> Mere-exposure effect
This is also called familiarity principle in psychology.
How exposure works is surprising and hard to believe. I came to an understanding of how powerful this is only for the last few years.
When you see something, someone for time and time again, you start building a relationship, even trusting that item or personality. Think of Coca Cola, if you drink coke at some point, it is not because coke tastes amazing but because it was available everywhere.
This is very true for todays online media landscape. If you wish people to relate with you or your brand, just get exposed to them in massive amount. Keep in mind that you have to be valuable still, otherwise you will become a scam.
Think of why you relate and know your family the most, maybe because you are exposed to them the most?
> Incentives, lowering friction
Incentives are super practical and useful for everyday stuff.
You want to eat healthy, make healthy food more available or make nasty food hard to reach.
Increase friction for bad habits and decrease for the behaviours you want to achieve.
You can use this model externally as well. Most companies creates incentives for their employees to drive successful results. You can design incentives at home for your kid to increase engagement in positive behaviour or sleep.
> Reciprocity
Doing a favor goes a long way in life. People remember favor for a long time and try their best to return it as soon as possible.
Reciprocity is a great model to make an introduction in relationships and business. When you provide free value for your clients, they will support your work. When you help your close friends without expecting anything, they will be there when you need it.
> Long Term (Second Order) Thinking
Jeff Bezos talks about how he asks his future self when looking for an answer. Looking for the long term impact of a decision gives a wider perspective and results in healthier decisions overall.
We generally avoid long term implications as it becomes harder to think compared to easier short term effect. One main example is when dealing with a decision to ask the question “will this make me happy or fulfilled 5-10 years later?”
Funnily enough, this is how Jeff Bezos started Amazon, he decided it will make him better fulfilled if he tries to start his own business selling books.
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